Durbin: Department of Defense Puts University of Phoenix on Probation

Durbin called for DOD investigation into for-profit college after an alarming report documenting deceptive recruiting of servicemembers

[WASHINGTON, D.C.] – Vice Chairman of the Senate Appropriations Subcommittee on Defense, U.S. Senator Dick Durbin (D-IL) today praised the Department of Defense (DOD)’s decision to place the University of Phoenix on probation and prohibit the company from enrolling new servicemembers using its Tuition Assistance program. Additional information on their action can be found on the department’s website.

“This is a decisive action by the Department of Defense to protect servicemembers and taxpayers from a company that offers degrees of questionable value. With below-average graduation rates and a student loan default rate almost forty percent higher than the national average, the University of Phoenix is going to have a hard time explaining why students should continue to enroll in this institution,” said Durbin. “I will be calling on the Department of Education and the Department of Veterans Affairs (VA) to review the Defense Department’s findings and take appropriate action against the University of Phoenix to protect Title IV students and veterans using GI Bill benefits.”

Durbin’s letter to the Department of Defense requesting an investigation can be found HERE. In June 2013, Durbin held the first Defense Appropriations Subcommittee hearing on voluntary military education programs, which highlighted the for-profit industry’s pattern of exploiting service members.

Read more about Durbin’s efforts to close the 90/10 loophole that allows for-profit colleges like the University of Phoenix to receive more than 90% of their revenue from the federal government HERE.

University of Phoenix

The University of Phoenix is a for-profit company that makes much of its money off of service members and veterans, including nearly $300 million from the DOD Tuition Assistance program and the VA’s GI Bill last year alone. In total, the University of Phoenix – whose students owe more in cumulative student debt than any institution of higher education in America – received nearly $3 billion in federal funding in 2014. In addition to DOD, the company is being investigated by at least three state Attorneys General, the Securities and Exchange Commission, the Department of Education Inspector General, and the Federal Trade Commission.

“According to a recent report by Brookings, in 2014, 13 of the top 25 schools whose students owed the most in federal debt were for-profit schools,” said Durbin. “We can’t continue to give outrageous, scandalous subsidies to these worthless companies. The for-profit college industry needs to be thoroughly investigated and carefully monitored.”

For-Profit College Industry

For-profit institutions of higher education enroll about 10 percent of all college students, but take in 20 percent of the Department of Education’s federal student aid funds and account for 44 percent of student loan defaults. Since the collapse of Corinthian Colleges, Incorporated, the for-profit college industry is experiencing a long overdue reckoning as state and federal investigations and lawsuits against the largest companies continue to accumulate.

ITT Tech is under investigation by at least 18 state Attorneys General and the U.S. Department of Justice and is being sued by the New Mexico Attorney General, the Consumer Financial Protection Bureau, the Securities and Exchange Commission.

Education Management Corporation is under investigation by at least 14 state Attorneys General and is being sued by the Colorado Attorney General and the U.S. Department of Justice.

Career Education Corporation is under investigation by 21 state Attorneys General.

Other major for-profit college chains such as DeVry, Westwood, and Kaplan are also facing additional regulatory scrutiny.